Bringing practices in line with the law

Can there possibly be anything left to say about the Armstrong Williams pay-for-play scandal?

Can there possibly be anything left to say about the Armstrong Williams pay-for-play scandal?

Before the furor dies completely, we believe there is at least one more perspective. From our point of view, this incident illustrates the intersection of ethics, credibility, and legality. To view the problem as just an ethics issue, or just a credibility issue, or just a legal issue, for that matter, does not adequately address the multifaceted and inter-related aspects of the issue.

Industry groups and government have sometimes found it necessary to legislate that trust, and there is now much talk about legislation that could further restrict PR activities. But it is by no means necessary to throw the baby out with the bath water. PR advocacy serves a valuable function. From breast cancer awareness to spreading the word about emergency relief plans, PR has helped inform an otherwise unaware public. But perhaps the time has come for the industry to re-examine existing legal standards and legislation that impact upon its conduct.

It might surprise many in the PR community to know that there are existing laws that govern the legality of the dissemination of a public statement that is commercial speech. One such law is the Federal Trade Commission (FTC) Act. Section five of this act prohibits unfair or deceptive acts or practices in or affecting interstate commerce. The act, along with FTC regulations and guides, makes clear that it is illegal for anyone to make a misrepresentation either by an affirmatively false statement or by failing to disclose a material fact that would likely influence the decision of a consumer acting reasonably under the circumstances.

As an example, a reasonable consumer is likely to believe that the statement, "I use Rembrandt toothpaste because I like how white it makes my teeth," when uttered by someone who is not an actor as part of an advertising campaign, reflects the honest belief of the person making the statement, and that the person was not paid or otherwise promised some benefit in return for a favorable opinion. If the true set of facts were different (if, for example, the person was promised a payment for his opinion), the statement would be false and misleading on account of what it fails to disclose - the fact that the person was paid. Indeed, the FTC's guide regarding the use of testimonials and endorsements would suggest that a disclosure would need to be made in any advertising context where it is not obvious that the person speaking was paid to deliver the message. The FTC's jurisdiction is limited to unfair practices involving consumers and/or competitors, so it would not be implicated in the Williams controversy. It is nonetheless an instructive framework for analyzing the issue.

The ad industry has long lived with the FTC standard. It has been subject to FTC enforcement, competitive challenges under federal false advertising laws, and even scrutiny by TV networks, which review claims in commercials against network standards before broadcast. In the wake of the US Supreme Court decision in Nike v. Kasky, it is now increasingly likely that many forms of corporate communications might be considered commercial speech and, thus, subject to the FTC standard. Long gone are the days when corporate communicators and PR executives could hide behind the shield of the First Amendment. PR, welcome to the brave (not so new) world.

The truth is, even before the Department of Education (DoE) controversy, there has been a trend toward potential claims including PR firms for their role in disseminating a message that is misleading or, more commonly, has omitted material facts. This so-called "messenger liability" has already been seen in a variety of PR activities, including healthcare, crisis communication, and consumer PR.

Many PR firms are concerned about the increased attention being placed on their activities in recent weeks. They should be. Prudent steps should be taken by all PR firms to address these types of issues. With this in mind, we propose a four-point plan to bring ethics, credibility, and legality into alignment:

  • Educate key staff members about the FTC standard and "messenger liability."

  • Review existing spokespeople's contracts and revise existing model agreements with a sensitivity toward the FTC standards and the DoE controversy, so they address what responsibility the talent has to disclose their relationships with the PR agency.

  • Develop detailed internal ethical guidelines that suggest solutions and provide answers to some likely scenarios and "frequently asked questions" arising from the current controversy.

  • Create best practices for handling spokespeople and media tours, in which all people and entities involved are informed about spokespeople's relationships with the PR agency and its clients.

  • Michael Lasky and Joseph Lewczak are partners at the New York law firm of Davis & Gilbert.

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